Policy Matters Newsletter - January 13, 2023

Labor Employment Policy Highlights of 2022. This past term saw more legislation pass through congressional chambers at a more efficient clip than we have seen in quite some time. That does not mean that federal agencies were quiet in their regulatory capacity; indeed, quite the opposite: federal agencies were busy promulgating regulations affecting the employer community, enforcing existing regulations, and as described below, planning to engage in additional rulemaking in 2023. The below represents only a smattering of the biggest policy issues of 2022.

• Inflation Reduction Act. This measure, passed through reconciliation (without any GOP support)—discussed in detail here— headlines the numerous pieces of legislation passed this past year. This measure constitutes the largest single investment in clean energy in the history of this country.
• “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021.” This measure—discussed in detail here—which passed with broad bipartisan support, constitutes the first materialization of federal legislation inspired by the “Me Too” movement.
• Executive Order on Project Labor Agreements (PLAs). Last winter, President Biden ordered—which Seyfarth discussed here and we discussed here—that project labor agreements (“PLAs”) be completed for any federal construction projects valued at or above $35 million.
• CHIPS and Science Act. This measure—which we discussed here—according to the White House, “will strengthen American manufacturing, supply chains, and national security, and invest in research and development, science and technology, and the workforce of the future to keep the United States the leader in the industries of tomorrow, including nanotechnology, clean energy, quantum computing, and artificial intelligence.”
• SPEAK OUT Act. This measure—which we discussed here and here—followed shortly on the heels of the passage of the Ending Forced Arbitration Act, and constituted Congress’ second legislative stab at implementing the legislative agenda undergirding the “Me Too” movement. The new law renders null and void certain nondisclosure agreements signed at the onset of employment where the employee subsequently alleges sexual harassment or assault.
• Consolidated Appropriations Act of 2022. To the chagrin of some of the more conservative members of the GOP caucus, Congress was able to send a spending bill including some hefty employer obligations to the president’s desk for signature. First, the measure appropriates large budget increases for those federal agencies tasked with enforcing workplace laws and regulations, especially the NLRB, in line with President Biden’s pledge to be the most union-friendly president in history. Tacked onto the spending measure were The Pregnant Workers Fairness Act (R. 1065) and the PUMP for Nursing Mothers Act (S. 1658): the former requires employers to provide reasonable accommodations for pregnant workers; the latter expands protections for nursing parents who need a private lactation space and certain break times during work.
• Executive Order 14026. This order mandates increasing the hourly minimum wage paid by parties that contract with the federal government to $15.00 for those workers working on or in connection with the federal government and resulted in the DOL issuing a final rule requiring the increase. The DOL has issued guidance regarding compliance with the rule.
• Updating the Davis-Bacon and Related Acts Regulations. This proposed regulation—which our own Scott Hecker discussed here, we discussed here, and podcasted here—promises a return of the definition of “prevailing wage” back to the three-step process used from 1935 to 1983.
• Final regulations on ERISA Fiduciary Duties Related to ESG. It took some time and a lot of talk, but the DOL has finalized a regulation—which we discussed here—permitting consideration of environmental, social, and governance (“ESG”) factors when selecting vehicles for investment opportunities.
• DOL 2023 Agenda. Seyfarth has put together this helpful summary of the DOL’s agenda for 2023.
• Notice of Proposed Rulemaking: Independent Contractors. This proposed rule—which we discussed numerous time, including here, and podcasted on, and which Seyfarth discussed here—portends a drastic shift in the landscape governing classification of independent contractors under the Fair Labor Standards Act.
• DOJ Prioritizes Punishing Price Gouging. US Department of Justice’s Antitrust Division announced a new enforcement initiative—which we discussed here, and Seyfarth summarized here—to find and stop price fixing agreements seeking to hide behind supply chain disruptions allegedly caused by the pandemic.
• EEOC and DOJ Guidance on AI. Both agencies have issued guidance—which we discussed here, and Seyfarth summarized here—to help employers using AI to ensure their compliance with the Americans with Disabilities Act.
• OSHA National Emphasis Program. OSHA has created a temporary program—which we discussed here, and Seyfarth discussed here —focusing OSHA's resources on outdoor and indoor heat illnesses.
• OSHA Healthcare ETS Regarding COVID to Become Permanent. The proposed COVID-19-prevention rule—which Seyfarth discussed here—is under review by the White House’s Office of Information and Regulatory Affairs (an under-the-radar, but very important executive agency), and will likely be published in the federal register in short order.
• NLRB Proposed Rule Ease Union Organizing. The NLRB has issued a proposed rule—which we discussed here—that would rescind a rule finalized in spring 2020 (when the Board was still under Republican control) that angered organized labor, which argued that the new rule made it easier to disband, and harder to organize, unions.
• NLRB NPRM Regarding Joint Employment. The NLRB has issued an NPRM—which we discussed here—emphasizing that a company with “indirect” and/or “reserved” forms of control over the terms and conditions of another company’s employees can be found a “joint employer” under the NLRA, instead of requiring a showing of “direct and immediate control.” Whether through the new proposed rule, or through NLRB decision making, employers should brace for a significantly revised rule that will make it easier to find joint employment.
• NLRB: Consequential Damages. The NLRB recently ruled 3-2 to add consequential damages to its traditional make-whole remedies like back pay and reinstatement, regardless that such damages tend to be speculative. The decision comes on the heels of a memo by the general counsel instructing field offices to seek consequential damages.
• OFCCP Directive 2022-01: Pay Equity Audits. This directive—which we discussed here, and Seyfarth summarized here—requires audited contractors to produce written proof that they have analyzed their compensation, but does not (like a previous, replaced version would) require the production of privileged communications or attorney work product.
• DHS DACA Rulemaking. DHS has promulgated a final rule—which we discussed here—that, for the most part, codifies a 2012 memo issued by then-President Obama that established the DACA program. The NPRM received more than 16,000 comments!
• Department of Treasury: Final Rule Regarding ACA Eligibility. The Treasury Department issued a final rule portending to fix the so-called “family glitch,” which left a host of US citizens unable to procure insurance under the ACA. The rule amends the regulations regarding eligibility for “Obamacare” subsidies to provide that coverage for family members of an employee be determined based on the employee’s share of the cost of covering the employee and those family members, not the cost of covering only the employee. 
• EEOC Looks to Get in the Game in 2023. Readers of this newsletter were likely—pleasantly—surprised to see such a dearth of action out of the EEOC in 2023. However, as we noted here and here, that dearth was likely due the composition of the board. But that has all changed, now with a Democratic majority, a generous budget increase, and several new strategic objectives planned for this FY 2023, readers should expect EEOC activity to increase.
• All of the Great Loosening. As we noted here, here, and here, 2022 saw COVID-19-related-government restrictions falls across the nation, at the federal, state and local level. Yet, employers are still tasked with addressing the numerous infections employees are currently contracting on a daily basis. This author is aware of quite a few folks who have been recently wiped out from the virus.
• Seyfarth Hosts Government Relations Policy Summit. As COVID-19 restrictions loosened across the nation, we were finally able to gather in person to discuss what matters most: What kinds of government policies can we expect in 2023. It was a wonderful, full-day conversation and we look forward to doing it again!

FTC Proposes Rule Banning Non-Compete Agreements. As Seyfarth noted here (it is worth a read, laying out the numerous problems the proposed rule presents), the FTC has taken an activist approach to regulating when, earlier this month, it published a proposed rule which would ban all non-compete agreements between employers and “workers” (broadly defined to include employees, independent contractors, interns, and others).

The FTC included an overview fact sheet describing the proposed rule. The FTC has made a preliminary finding that non-competes constitute an unfair method of competition and therefore violate Section 5 of the Federal Trade Commission Act, leading to the proposed regulation. The proposed rule is very broad and does not currently include exclusions, such as for management, executives, or those provided access to trade secrets.

Apart from its substantive problems, the proposed rule is also sure to see legal challenges on a procedural front. Indeed, the US Chamber of Commerce has already come out publicly against the measure, arguing that the agency lacks congressional authority to issue the rule. Stay tuned!

California Releases Guidance on Pay Scale Disclosures. Since the passage of SB 1162, which we discussed here, and Seyfarth summarized here, employers have been scrambling to comply with the measure without any guidance outside of the statutory text. Thankfully, as Seyfarth explained here, the California Labor Commissioner’s office recently released eagerly anticipated Frequently Asked Questions on the state’s new pay scale disclosure requirements. The FAQs clarify which employers will be subject to the pay disclosure requirements and the content of the mandatory disclosures. Of note, the FAQs do not clarify whether the requirements only apply to postings made on or after January 1, 2023, or if it will apply to all postings that remain active as of January 1, 2023.

New York State Takes The LE Policy Matters Mantle. The last few years have seen a variety of state legislatures—e.g., Virginia—competing with California for the mantle of the state passing the most legislation related to labor or employment. For 2022, it appears New York has taken the competition. As Seyfarth explained here, in December 2022, New York’s Governor signed several pieces of legislation impacting New York employers, most notably laws regulating lactation accommodation in the workplace and the electronic posting and issuance of mandatory workplace posters. Additionally, as Seyfarth noted here, New York City's Department of Consumer & Worker Protection recently revised its proposed rules implementing Local Law 144 of 2021, which regulates employers' use of automated employment decision tools. Similar to the December headache-causing SB 1162 in California, New York passed legislation that will require employers to disclose salary ranges in advertisements for jobs, promotions, or transfer opportunities. Finally, as Seyfarth noted here, a bill pending in the New York City Council would prohibit employers from discharging employees absent just cause or a bona fide economic reason.